The country was due to pay compensation of more than $400 million in August 2021, but has not made any disbursements so far.
In June 2021, it was announced that the World Bank Arbitration Committee had ruled definitively against the Ecuador, and in favor of French oil company Perenco, within a legal dispute originated in 2007.
Failure to comply with the conditions established in the contracts, in relation to the distribution of surpluses due to the increase in the price of crude oil, caused the foreign company to claim confiscatory actions by the Ecuadorian State.
Seven months ago, the final ruling forced the country to pay a compensation of more than $400 million. However, that payment has not been made to date.
In that context, perennial requested, before a court of justice of U.S, that the arbitration award that has already been won against Ecuador “and tax claims are not used to reduce the over $400 million award.”
In July 2021, the Ecuadorian Government, through the Attorney General’s Office, requested an extension for the payment, which initially was to be given until August 9 of last year. This extension should serve to negotiate a discount on the value of the compensation.
According to the national authorities, the amount owed could be reduced if it was crossed with pending tax obligations that the French oil company had within the country. For that, Ecuador filed an application in a court in the District of Columbia, on US soil.
However, now perennial considers that too much time has passed and that he should receive the compensation complete, without any discounts. The company claims that it does not have sufficient assets to cover these pending taxes.
There is still no official response from the Ecuadorian government on the new legal action of the French oil company.
During the last 14 years, especially in the Correísta decade, several oil companies sued the country for breach of contracts. Among them are Repsol, perennial, Burlington, Murphy, City East.
In some cases, such as Burlington, they had to pay compensation; in others, the country recognized the losses of the companies due to contractual changes without consultation. Only Repsol withdrew the demands and remained operating after reaching agreements. (JS)
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